NABET, NABET 2019 Conference

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Beyond the Plastic Bans: the Impact of the Chinese Plastic Bans on Risk Transmissions among Chinese Plastics, Oil and Currency Markets
Jingze Jiang

Last modified: 2019-08-22

Abstract


Countries experiencing the severe plastic pollution have passed legislation to reduce plastic usage, and China is one of the countries to implement plastic bans. China has banned all supermarkets, department stores, and other retailers from providing customers with free plastic bags since June 1st 2008. Since January 2018, the foreign waste including plastic waste has been banned by China as well. Although the goal of the bans is to reduce plastic pollution, plastic bans may also induce the uncertainty to the plastic feedstock market, namely Naphtha market. China is also the largest importer and exporter of plastic products and was the largest importer of the plastic waste in the world. The plastic bans are likely to reduce the plastic consumption in China, which may, in turn, affect the importing and exporting of plastics on the international market. Most studies examining the plastic bans have focused on the environmental impact of the bans, and only a few scholars have analyzed the impact of the bans beyond the plastics market. The VECM-GARCH model is implemented to study the impact of the Chinese plastic bans on volatility spillover effects among plastics, oil and exchange markets. The results indicate that the 2008 plastic ban has increased risk transmission from the Chinese plastics market to the oil and currency markets in China.


Keywords


commodity market, risk management, Plastic,